The blowback one can get from ‘jugaad’

Sometime ago, jugaad — the Indian practice of slapdash innovation from whatever came to hand — was celebrated as a model of success worldwide. Management gurus built reputations extolling its virtues: from attaching a diesel pump to a handcart to churning lassi in washing machines.

It acquired respectable-sounding names like ‘frugal innovation’ or ‘minimalistic engineering’. Well, the era of jugaad is fast coming to an end, and good riddance for that. Here is why. Admirers of jugaad overlook several things. One, jugaad cares little for quality or endurance, as long as slapup works for a while.

Dhoom and gloom

Upsetting the Jugaad Cart

For example, a cart jerry rigged with a pump set might get rid of the inconvenience of pedalling, but won’t survive the most rudimentary pollution check. Curd blended in a washing machine might damage your guts. Two, jugaad is a product of scarcity, which leaves its practitioners with no option but to innovate with whatever is at hand. This leads to unintended consequences, not all pleasant.

India’s urban sprawl is mostly a product of jugaad, where few care about building or construction norms, especially in lower-income precincts. Floors are added atop structures with shallow foundations, with only prayers to hold these up if, say, an earthquake strikes. Electrical wiring spreads like cobwebs. ‘Hooking’ an additional line — or 10 — to existing high tension cables is common. Fire hazard, anybody?

Three, jugaad targets minimal expectations. An ill-trained work crew on a slave-driver schedule can hastily assemble a door for a new apartment. If it doesn’t open or shut properly, why, just kick it in. But all this was bound to bite us where it hurts. And that’s happening now. Jugaad, by whatever name, distorts our attitudes towards work and skills. It also numbs our expectations, so we stop noticing what’s amiss.

That includes policy in New Delhi and the states, swayed by rhetoric, extraordinarily slack when it comes to action that could really count. This is hurting us badly in the global market. India’s exports of goods and services have shrunk in 20 out of 21months. Policymakers blame this on sluggish global growth. This could be true, if we were doing relatively better than other emerging markets in our share of global exports.

We aren’t. Between June 2011 and June 2016, after discounting for stuff like exchange rates and prices, the country’s real export growth is now below the average emerging market rate. Turkey and Indonesia do worse than us. Thailand and Mexico fare substantially better.

After rising 10 years between 2001 and 2011, our share in global exports is stuck around 1.6 per cent for the last five years. If policymakers were correct about just global factors holding up exports, neither of these things would have been inevitable. So, all right, blame the Reserve Bank of India (RBI) for keeping money too tight. That, at least in theory, encourages the real value of the rupee to appreciate against other currencies, denting competitiveness.

Alas, even that argument does not hold water. If you strip away the effect of a stronger or weaker rupee, what you’re left with is exports in volume terms: how many real tonnes or kilolitres or gigabytes of stuff we shipped overseas. This was growing around 25 per cent in 2005-06. Last fiscal, export volumes shrank almost 10 per cent.

Slug’s Time to Slog

A recent report by HSBC separates myth from reality about India’s dismal export performance. Its analysts look at the effect of the rupee, global sluggishness and domestic factors like poor infrastructure, lethargic policy and other systemic problems. They find that the biggest culprit is the country’s creaking infrastructure and broken policy apparatus.

For all exports taken together, these things account for a staggering 50 per cent of the decline. Slow global growth takes care of another 33 per cent. A stronger rupee can only be blamed for 17 per cent of our export slowdown.

Sure, there are sectoral differences. For example, services exports are dented more severely, by around 25 per cent, by currency appreciation, compared to barely 10 per cent for goods exports. Services are also hurt more by global factors. But the main shackles on exporters are policy incompetence and administrative sloth.

Remember, services are only 40 per cent of exports. The other 60 per cent is goods that span everything from hi-tech engineering to relatively low-tech stuff like farm products or minerals, and intermediate-tech things like textiles and refined fuels. The blowback from policy sloth is greatest on this lot.

We are shackled by poor physical infrastructure: bad roads and ports, inadequate power supply, the lack of stable and cheap fuel like coal and gas. We’ve long neglected irrigation, farm technology, storage and transport.

But one major sphere where governments have let us down is our own people. State education and healthcare systems have collapsed. Our best minds flee overseas to pursue their interests. Many who stay back cannot — or are not allowed to — compete globally. We are left with jugaad, and its terrible aftermath on competitiveness, exports and our own citizens.